TOKYO (April 21): Benchmark Tokyo rubber futures jumped more than 4% on Thursday to hit an 8½-month high above a key 200 yen level, as firmer oil prices and hopes of a pickup in demand in top buyer China bolstered investors’ appetite for risk.
“A gain in oil prices, a lower yen and higher stock prices all helped boost risk appetite,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
The Tokyo Commodity Exchange (TOCOM) rubber contract for September delivery <0#2JRU:> finished 8.4 yen, or 4.3%, higher at 202.2 yen (US$1.84) per kg. It earlier touched a peak of 203.2 yen, the highest since Aug. 3, 2015.
Crude prices rose on Thursday, reversing earlier declines, as the International Energy Agency (IEA) said that 2016 would see the biggest fall in non-OPEC production in a generation, helping rebalance a market that has been dogged by oversupply.
The US dollar traded within a whisker of 110.00 yen on Thursday, off this week’s trough of 107.75.
A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
World stock markets climbed to their highest in almost five months on Thursday on higher oil prices. Japan’s Nikkei gained 2.6% on Thursday, while Wall Street shares ended less than 2% short of a record-high close on Wednesday.
Views that the recent data suggested China’s demand has hit a bottom also added to support, dealers said.
China’s economy grew at its slowest pace in seven years in the first quarter, however, indicators from the country’s consumer, investment and factory sectors point to nascent signs the slowdown in the world’s second largest economy may be bottoming out.
“Now that the TOCOM cleared a 200 yen hurdle, it is likely to head toward a next technical ceiling of around 208 yen,” Kikukawa said.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, have risen about 40% since hitting a low of 144.5 yen in February.
The most-active rubber contract on the Shanghai futures exchange for September delivery soared 500 yuan to finish at 13,445 yuan (US$2,075.01) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 159.0 US cents per kg, up 4.3 cent.
(US$1 = 6.4795 Chinese yuan)
(US$1 = 109.6700 yen)
